Riggs National Corporation & Subsidiaries, f.k.a. Riggs National Bank and Subsidiaries - Page 3

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                                  FINDINGS OF FACT                                    
               We incorporate herein the findings of fact set forth in                
          Riggs Natl. Corp. & Subs. v. Commissioner, 107 T.C. 301 (1996)              
          (Riggs I), revd. and remanded 163 F.3d 1363 (D.C. Cir. 1999)                
          (Riggs II), and Riggs III by this reference.  We also incorporate           
          herein the stipulations and exhibits in Riggs I and Riggs III by            
          this reference.  For ease of understanding, we repeat those facts           
          set forth in Riggs I and Riggs III which we deem necessary to               
          clarify the supplemental findings set forth herein and the                  
          ensuing opinion involving the issue for decision.                           
               In Brazil, the Central Bank performed a number of                      
          governmental functions in conjunction with Banco do Brazil,                 
          including the unified management and operation of Brazil’s                  
          monetary and financial system under what was known as the caixa             
          unico system.3  From 1965 through 1986, Banco do Brazil had four            
          primary functions:  (1)  A commercial bank, (2) a monetary                  
          authority, (3) management control and distribution of currency,             
          and (4) responsibility for bank clearing.  Further, like the                
          Central Bank, Banco do Brazil functioned as: (1) A lender of last           
          resort to public-sector entities, (2) a development bank                    
          responsible for various subsidized credit programs of the                   
          Brazilian Government, and (3) a fiscal authority that managed the           


               3Until the Central Bank was formed in 1965, Banco do Brazil            
          served as the country’s sole monetary authority.                            





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